Unassociated Document


    


    LOAN
AGREEMENT

    


    THIS LOAN AGREEMENT (the
“Agreement”) is
dated as of the 30th day of November, 2009, by and between Emerald Dairy Inc., a
Nevada corporation, with an address at 11990 Market Street, Suite 205, Reston,
VA 20190 (the “Borrower”), and Wen
Sheng Liu, a resident of the People’s Republic of China, with an address at
S2-1-1002
Xing He Wan, Si Ji Xing He Lu,Chao Yang Bei Lu, Chao Yang District, Beijing,
China 100123 (the “Lender”).

    


    WITNESSETH:

    


    WHEREAS, the Borrower requires
funding in the amount of One Million Seven Hundred Fifty Thousand ($1,750,000)
Dollars for the purposes hereinafter set forth; and

    


    WHEREAS, the Borrower is
borrowing from the Lender One Million Seven Hundred Fifty Thousand ($1,750,000)
Dollars, in consideration for which the Borrower is issuing to the Lender a
non-negotiable promissory note.

    


    NOW, THEREFORE, it is agreed
as follows:

    


    1.           Commitment of Lender;
Borrowing Conditions.

    


    1.1         Commitment.  Subject to the
terms and conditions of this Agreement, the Lender hereby agrees to make a
one-year term loan (the “Loan”) to the
Borrower, in the principal amount of One Million Seven Hundred Fifty Thousand
($1,750,000) Dollars (the “Principal”).

    


    1.2         Promissory
Note.

    


    (a)         General.  The Loan shall be
evidenced by a non-negotiable promissory note, issued by the Borrower to the
Lender, in substantially the form of “Exhibit A” annexed
hereto (the “Note”), dated as of
even date herewith.  The Principal, and any accrued and unpaid
Interest (as defined in Section 1.2(b) below) shall be due and payable in full
on the one (1) year anniversary of the Closing Date (as defined in Section 6
below) (the “Maturity
Date”).

    


    (b)         Interest.

    


    (i)           The
Loan shall bear Interest at the rate of ten (10%) percent per annum, computed on
the basis of the actual number of days elapsed in a year of 360
days.  Any accrued and unpaid Interest shall be due and payable in
full on the Maturity Date.

    


    (ii)           Upon
the maturity of the Note, by acceleration or otherwise, and/or after judgment,
interest shall be payable at the rate of twelve (12%) percent per annum or at
the judgment rate, whichever is higher, until the obligation is paid in
full.


    
      
         


      

      
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    (c)           Prepayment.   The
Borrower may from time to time prepay any amount due under the Note, in whole or
in part, without penalty.  All payments made shall be applied first
toward the payment of Interest and the balance toward the reduction of the
Principal.

    


    2.           Representations
and Warranties of the Borrower.  The Borrower
makes the following representations and warranties:

    


    2.1         Organization
and Authorization.  The Borrower (a)
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, (b) is duly authorized to transact business and is
in good standing in every other jurisdiction where the failure to qualify to do
business would have a material adverse effect upon the Borrower, and (c) is duly
authorized and empowered to create, grant and issue the Note, and to execute and
deliver this Agreement.  The Borrower has the authority to own, lease
and operate its assets, and to carry on its business as presently
conducted.  All action on the part of the Borrower requisite for the
due creation, issuance and delivery of this Agreement and the Note has been duly
and effectively taken.  This Agreement and the Note, upon the
granting, issuance and delivery thereof, will be the valid, binding and
enforceable obligations of the Borrower in accordance with their respective
terms and compliance herewith will not violate any provision of law, the
Articles of Incorporation or Bylaws of the Borrower, or any agreement, judgment,
order or decree to which the Borrower is a party or otherwise bound, subject to
applicable bankruptcy, insolvency, or reorganization, moratorium or other
similar laws relating to or affecting generally the enforcement of creditors’
rights.  No approval or consent of any governmental agency or body of
the United States or any state thereof or of any other entity or person is
required as of the Closing Date for the legal and valid execution and delivery
by the Borrower of this Agreement, the Note pursuant to this Agreement, or the
performance of any obligation of the Borrower hereunder.

    


    2.2         Litigation.  There is no
litigation, legal or administrative proceeding, investigation or other action of
any nature pending or, to the knowledge of Borrower, threatened, against or
affecting the Borrower and/or its subsidiaries which: (a) involves the
possibility of any judgments or liabilities aggregating more than Fifty Thousand
($50,000) Dollars not fully covered by insurance, or (b) which may materially
and adversely affect the assets of the Borrower or the right of the Borrower to
carry on its business as now conducted or as contemplated.

    


    2.3         Taxes.  All tax returns
of the Borrower and its subsidiaries, if any, which are shown to be due and
payable thereon have been paid.  The Borrower does not know of any
ongoing tax audit, proposed tax deficiency, assessment, charge or levy against
it, the payment of which is not adequately provided for on the books of the
Borrower.

    


    2.4         Full
Disclosure.  Neither this
Agreement, nor any of the exhibits or schedules attached hereto, contain any
statement that is false or misleading with respect to any material fact and do
not omit to state a material fact necessary in order to make the statements
therein not false or misleading.


    
      
         


      

      
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    2.5           Compliance
with Instruments; etc.  The Borrower is
not: (a) in default under any indenture, agreement or instrument to which it is
a party or by which it is bound, (b) in violation of its Articles of
Incorporation, Bylaws or of any applicable law, (c) in default with respect to
any order, writ, injunction or decree of any court, administrative agency or
arbitrator, or (d) in default under any order, license, regulation or demand of
any government agency, which default or violation would materially and adversely
affect the business, properties, condition (financial or otherwise) or business
prospects of the Borrower.

    


    3.           Affirmative
Covenants of the Borrower.  Except as
specifically set forth herein, so long as any part of the Principal or Interest
remains outstanding, without the prior written consent of the
Lender:

    


    3.1           Discharge
Taxes and Indebtedness.  The Borrower will
pay and discharge, as they become due, all taxes, assessments, debts, claims and
other governmental or non-governmental charges lawfully imposed upon or incurred
by it or the properties and assets of the Borrower, except taxes, assessments,
debts, claims and charges contested in good faith in appropriate proceedings for
which the Borrower shall have set aside adequate reserves for the payment of
such tax, assessment, debt, claim or charge.  The Borrower shall
provide the Lender, upon the Lender’s request, evidence of payment of such
taxes, assessments, debts, claims and charges satisfactory to the
Lender.

    


    3.2           Insurance.  The Borrower
shall maintain such insurance on its properties and assets with financially
sound and responsible insurance companies, in such amounts as from time to time
are reasonably required by the Lender.  The Borrower shall: (a)
deliver to the Lender, upon its request, a detailed list of insurance then in
effect, stating (i) the names of the insurance companies, (ii) the amounts and
rates of the insurance, (iii) dates of expiration thereof and the properties and
risks covered thereby; and (b) upon request, provide to the Lender copies of all
insurance policies.

    


    3.3           Maintain
Properties.  The Borrower
shall maintain in full force and effect its corporate existence, rights and
franchises and all material terms of licenses and other rights to use licenses,
trademarks, tradenames, service marks, copyrights, patents or processes owned or
possessed by it and necessary to the conduct of its business.  The
Borrower will maintain, preserve and keep all of its properties, equipment and
assets in good repair, working order and condition, and make, or cause to be
made, all necessary or appropriate repairs, renewals, replacements,
substitutions, additions, betterments and improvements thereto.

    


    3.4           Furnish
Information.  Promptly on
request of the Lender, the Borrower will furnish such information as may
reasonably be necessary to determine whether: (a) the Borrower is complying with
its covenants and agreements contained in this Agreement, or (b) an Event of
Default (as hereunder defined) has occurred hereunder.

    


    3.5           Additional
Documentation.  In furtherance of
the transactions herein contemplated, the Borrower will execute and cause to be
delivered to the Lender such other certificates, documents, statements,
agreements and opinions as may be reasonably requested by the Lender during the
term of this Agreement.


    
      
         


      

      
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    3.6         Notice of
Adverse Change.  The Borrower
shall promptly give notice to the Lender (but in any event within seven (7)
business days) after becoming aware of the existence of any condition or event
which constitutes, or the occurrence of: (a) any Event of Default as hereunder
defined; or (b) the institution or threatening of institution of an action, suit
or proceeding against the Borrower before any court, administrative agency or
arbitrator, which, if adversely decided, could materially adversely affect the
business, prospects, properties, financial condition or results of operations of
the Borrower, whether or not arising in the ordinary course of
business.  Any notice given hereunder shall specify the nature and
period of existence of the condition, event, information, development or
circumstance, the anticipated effect thereof and what actions the Borrower has
taken and/or proposes to take with respect thereto.

    


    3.8         Compliance
With Agreements; Compliance With Laws.  The Borrower
shall comply with the terms and conditions of all material agreements,
commitments or instruments to which the Borrower is a party or by which it may
be bound.  The Borrower shall duly comply in all respects with any
relevant laws, ordinances, rules and regulations of any foreign, federal, state
or local government or any agency thereof, or any writ, order or decree, and
conform to all valid requirements of governmental authorities relating to the
conduct of its business, properties or assets.

    


    3.7         Use of
Proceeds.  The parties agree
that the Borrower intends to apply substantially all of the proceeds of the Loan
toward the cost of completing the construction and equipping of its new
production facility in Hailun City, Heilongjiang Province, PRC.

    


    4.           Defaults And
Remedies.

    


    4.1         Events of
Default.  Any one of the
following events shall be considered an event of default (“Event of Default”) as
that term is used herein:

    


    (a)           If
the Borrower defaults in the payment of Principal or Interest on the Note after
the same shall become payable as therein or herein set forth; or

    


    (b)           If
any representation or warranty made by the Borrower herein proves to have been
untrue in any material respect as of the Closing Date, or any information,
statement, certificate or data furnished hereunder proves to have been untrue in
any material respect as of the date as of which the facts therein set forth were
stated or certified; or

    


    (c)           Except
for a default covered by clauses (a), (b) and (d) hereof, if a default shall be
made in the due observance or performance of any other covenant, affirmative or
negative, or condition to be kept or performed by the Borrower contained in this
Agreement; or


    
      
         


      

      
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    (d)           If
the Borrower shall (i) sell all or substantially all of its assets, or (ii) make
a general assignment for the benefit of creditors, or (iii) apply for or consent
to the appointment of a receiver, trustee, or liquidator of the Borrower or of
all or a substantial part of its assets, or (iv) be adjudicated a bankrupt, or
(v) file a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization or to effect a plan or other arrangement with creditors or file a
petition or answer seeking to take advantage of any law (whether federal or
state) relating to the relief of debtors.

    


    4.2         Acceleration
of Loan.  During the continuation of any Event of Default
specified in Section 4.1 hereof, the Lender or any other holder of the Note, may
by notice in writing delivered to the Borrower, declare the entire outstanding
Principal and the Interest due and payable, and the said Principal and Interest
shall thereupon become and be immediately due and payable without presentment,
demand, protest, notice of protest or other notice of dishonor of any kind, all
of which are hereby expressly waived by the Borrower.

    


    4.3         Enforcement
of Rights.  Upon the happening of any Event of Default
specified in Section 4.1 hereof, the Lender or any other holder of the Note, may
proceed to protect and enforce his, her or its rights with respect to the Note
and the other documents referred to herein either by suit in equity or action at
law, and proceed to obtain judgment or any other relief whatsoever.

    


    4.4         Payment
of Expenses.   The Borrower shall pay all expenses, court
costs and attorneys' fees which may be incurred by the Lender or any other
holder of the Note in connection with or arising out of any Event of Default
hereunder.

    


    5.           Conditions
Precedent.  The obligations
of the Lender hereunder shall be subject to the performance by the Borrower of
all its agreements theretofore to be performed hereunder.  On the
Closing Date, the Lender shall receive in form and content satisfactory to
Lender and its counsel, an originally executed Note and such other documents or
instruments as the Lender may reasonably request.

    


    6.           Closing.  The closing of
the Agreement and the issuance of the Note to the Lender shall occur at the
offices of Blank Rome, LLP, Chrysler Building, 405 Lexington Ave., New York, NY
10174 on the date hereof (the "Closing Date"), or at
such other time or place as the parties shall agree.

    


    7.           Miscellaneous.

    


    7.1         Representation
to Survive Closing.  All warranties, representations, covenants
and agreements made by the Borrower herein shall survive the Closing
Date.

    


    7.2         Notice.  All
notices, requests, demands and communications under or in respect hereof shall
be deemed to have been duly given and made if in writing (including fax) if
delivered by hand or left at or posted by pre-paid registered or certified mail
(airmail if dispatched to a foreign county) to the party concerned at its
address first set forth above.  Service shall be deemed to be
effective: (a) so far as delivery by hand is concerned when handed to the
recipient or left at the recipient's address; and (b) by post three days after
posting (seven days if sent to a foreign country).  The said addresses
shall continue in force until alternatives are notified and receipt of such
notification has been acknowledged.


    
      
         


      

      
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    7.3           Binding
upon Successors.  All covenants and agreements herein contained
by or on behalf of the Borrower shall bind its successors and assigns and shall
inure to the benefit of the Lender and its successors and
assigns.  Borrower may not assign this Agreement or any rights or
duties hereunder without Lender’s prior written consent and any prohibited
assignment shall be absolutely void.  Lender reserves the right to
sell, assign, transfer, negotiate, or grant participation in all or any part of,
or any interest in Lender's rights and benefits hereunder; provided, that Lender
shall, for informational purposes but not as a requirement, notify the Borrower
of the identity of all other assignees or participants who have acquired an
ownership interest in the Note, and upon conversion, in the equity of the
Borrower as a result thereof.  In connection with any such assignment
or participation, the Lender may disclose all documents and information which
the Lender now or hereafter may have relating to Borrower’s
business.

    


    7.4           Counterparts.  This
Agreement may be executed in counterparts at one time or at different times and,
irrespective of the date of execution between the parties named herein, it shall
be deemed executed as of the date first above written.

    


    7.5           Governing
Law; Jurisdiction.  This Agreement and the performance of the
parties hereunder shall be construed and interpreted in accordance with the
internal laws of the State of New York, wherein it was negotiated and executed,
and the parties hereunder consent and agree that the state and federal courts
which sit in the State of New York and the County of New York shall have
exclusive jurisdiction with respect to all controversies and disputes arising
hereunder.

    


    7.6           Severability.  If
any provision of this Agreement is held to be unenforceable for any reason, the
remainder of this Agreement shall, nevertheless, remain in full force and
effect.

    


    7.7           No Waiver
of Rights.  No course of dealing on the part of the Lender, nor
any failure or delay on the part of the Lender with respect to the exercise of
any right, power or privilege given or granted hereunder, the Note or any other
document or instrument executed in connection herewith shall operate as a waiver
thereof as to any future defaults, or any single or partial exercise by the
Lender of any right, power or privilege granted or contained herein or therein
shall preclude the Lender from later or further exercise of any right, power or
privilege as to any future defaults.  The rights and remedies of the
Lender are cumulative and not exclusive of any other remedies under
law.

    


    7.8           No
Broker.  Each of the Lender and Borrower represents and
warrants to each other that they have not employed or dealt with any broker in
connection with any transactions contemplated by this Agreement and each of the
Lender and the Borrower shall indemnify and hold each other harmless from and
against any and all claims at any time heretofore or hereafter made for broker’s
or finder’s fees or commissions, which claim or claims arise from, out of, or in
connection with any of the transactions with any of the transactions
contemplated by this Agreement.


    
      
         


      

      
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    7.9           Construction.  Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural, the
term "including" is not limiting, and the term "or" has, except where otherwise
inducted, the inclusive meaning represented by the phrase
"and/or."  The words, "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement.  Section, subsection,
paragraph, clause, schedule, and exhibit references are to this Agreement unless
otherwise specified.  Any reference in this Agreement to this
Agreement shall include all alterations, amendments, changes, extension,
modifications, renewals, replacement, substitutions and supplements, thereto and
thereof, as applicable.

    


    7.10           Indemnification.
In the event the Lender is required to appear before, or participate in, or
become involved with, any proceeding initiated by or brought with respect to the
Borrower by any government or administrative agency, federal, state or local,
investigating the business operations or activities of the Borrower, the Lender
shall be reimbursed by the Borrower for all expenses incurred by it in
connection therewith, including, but not limited to, attorney's
fees.  Additionally, the Borrower will indemnify and hold harmless the
Lender from each and every liability, loss, obligation, cost or expense which
may be imposed or arising out of: (a) any such proceeding, or (b) any of the
transactions evidenced hereby, except for the Lender's gross negligence or
willful misconduct.

    


    7.11           Confidentiality.  The
Borrower agrees that it will not disclose, and will not include in any public
announcement, the name of the Lender, unless expressly agreed to by the Lender
unless and until disclosure is required by law or regulations, and then, only to
the extent of such requirement.

    


    7.12           Term.  This
Agreement shall become effective upon execution and delivery hereof by Borrower
and Lender and shall continue in full force and effect until all amount of
principal and interest on the Note have been paid in full.

    


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    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.

    


    
      
        	
                BORROWER:

              
	 
      
	
                EMERALD
      DAIRY INC.

              
	 
      
	
                By:

              	
                 /s/ Shu Kaneko

              
	 
      	
                 Name:
      Shu Kaneko

              
	 
      	
                 Title:
      Chief Financial Officer

              
	 
      
	
                LENDER:

              
	 
      
	
                 /s/ Wen Sheng Liu

              
	
                Wen
      Sheng Liu

              


      

    


    
      
         


      

      
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    “EXHIBIT
A”

    


    Form
of Promissory Note


    
      
         


      

      
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